Trump’s tax plan: 12 reactions you need to read

The Trump administration’s tax outline released Wednesday confirms much of what we've heard over the last few days. The nine-page framework (read the whole thing here) calls for: 

  • A top corporate tax rate of 20 percent
  • A special 25 percent rate for pass-through business income
  • Three individual tax brackets of 12 percent, 25 percent and 35 percent (with a possible fourth, higher rate on high-income households, to "ensure that the reformed code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.")
  • Roughly doubling the standard deduction to $12,000 for individuals and $24,000 for married couples
  • Eliminating the deduction for state and local taxes
  • Eliminating the Alternative Minimum Tax
  • Eliminating the estate tax
  • Keeping the popular deductions for mortgage interest and charitable donations
  • No changes to the capital gains and dividend tax rates

Here how some key players are reacting to the tax blueprint:

Tax-cutting activists are all in: “This framework is a giant step for a stronger economy, and more jobs and higher wages for the American people … Making it a reality would let taxpayers keep more of their hard-earned money, increase America’s global competitiveness, and send a message that there will be no better place in the world to invest and create jobs than the United States." – Nathan Nascimento, Freedom Partners

And so are many businesses: “We look forward to hearing more details but this is a very positive step forward to achieving the kind of comprehensive tax reform that is needed to keep our nation’s economy competitive in the global environment. This plan would provide much-needed relief for corporations, small businesses and middle-class individuals alike, and would help draw foreign capital and investment to the United States. This is the framework we need to unlock job creation and economic growth.” – Matthew Shay, National Retail Foundation

But those corporate tax cuts come with a high price: “When thinking about the goal of lowering the 35% top marginal corporate tax rate, the most important number to remember is a nice round one: the 10-year cost of each 1%-point reduction in the top corporate rate is about $100 billion. … For example, lowering the top marginal corporate tax rate from 35% down to 20%, without any offsetting changes elsewhere in the tax code, could be expected to lose about $1.5 trillion over the next ten years.” – J.P. Morgan economist Michael Feroli

And the cuts are wildly expensive overall, with possibly dire consequences: “Trump’s tax cuts could total a massive $6.7 to $8.3 trillion, $3 to $5 trillion of which may not be paid for by closing other tax loopholes and/or by limiting tax deductions. The resulting jump in the deficit threatens funding of Social Security, Medicare, Medicaid, public education and other vital services.” – Americans for Tax Fairness

Democrats are skeptical: “It seems that President Trump and Republicans have designed their plan to be cheered in the country clubs and the corporate boardrooms.” – Senate Minority Leader Chuck Schumer (D-NY)

And so is a notable independent: "At a time of massive wealth and income inequality, President Trump's tax plan is morally repugnant and bad economic policy. The last thing we should be doing right now is providing hundreds of billions in tax breaks to the wealthiest people and most profitable corporations in this country." – Sen. Bernie Sanders (I-VT)

There are questions about the distribution of benefits: “I’m not seeing *anything* that benefits the lowest-income 35% of [taxpayers], while the top 1% gets trillions of tax cuts.” – Lily Batchelder, law professor at NYU and former chief tax counsel for Senate Committee on Finance

And concerns about how the GOP will justify the cuts: “Relying on unreliable projections of economic growth may make reform appear responsible, but it’s avoiding the tough decisions. We all want higher economic growth, but the truth is that growth is hard to predict, let alone control with legislation. Banking on rosy projections of hypothetically higher growth is setting voters, and the economy, up for disappointment.” – Michael Peterson, Peter G. Peterson Foundation (The Fiscal Times is separately funded by Peter. G. Peterson, but is editorially independent.)

There’s not much detail on how families make out: “Families are an afterthought for this plan. High earners, corporations get a definite number. Parents? We'll get back to you.” – Ramesh Ponnuru, National Review

Not all Republicans may get on board: “I can’t vote for a bill that would eliminate the state and local tax deduction.” -- Rep. Peter King (R-NY)

And special interests are already pushing back: “This plan is a Washington money grab that takes away the most popular tax deduction from 44 million taxpayers in all 50 states, most of them middle class. ... This plan threatens necessary infrastructure investments and vital state and local public services, including education and public safety, that benefit all Americans.“ – Americans Against Double Taxation, a coalition defending the state and local tax deduction

In the end, Republicans may need help from Democrats: “I think we can [enact reforms] but we will need to have some Democrat help … I think we got to put aside the differences and start working together.” – Sen. Orrin Hatch (R-UT)


Tax Tips for Real Estate Agents and Brokers

Most real estate agents and brokers receive income in the form of commissions from sales transactions. You're generally not considered an employee under federal tax guidelines, but rather a self-employed sole proprietor, even if you're an agent or broker working for a real estate brokerage firm. This self-employed status allows you to deduct many of the expenses you incur in your real estate sales or property management activities. Careful record keeping and knowing your eligible write-offs are key to getting all of the tax deductions you're entitled to.

Read More

Brought to you by

Key Tax Tips When Filing for Divorce or Separation

Going through the process of divorce or separation is a trying time for any couple. Between dividing up property, legal proceedings and handling child custody, many people can forget the tax implications as well. You can avoid missteps with the IRS —especially if there's a breakdown in communication between spouses — by keeping in mind a few tax tips.

Read More

Brought to you by

At What Income Does a Minor Have to File an Income Tax Return?

If your kids are young enough to be your dependents, they may have to pay taxes. In some cases, you may be able to include their income on your tax return; in others, they'll have to file their own tax return or you will have to file a separate return on their behalf. Whether this is required depends on both the amount and source of the minor's income.

Read More

Brought to you by

Business Use of Vehicles

If you use vehicles in your small business, how and when you deduct for the business use of those vehicles can have significant tax implications. It pays to learn the nuances of mileage deductions, buying versus leasing and depreciation of vehicles. Special rules for business vehicles put in use in 2017 can deliver healthy tax savings.

Read More

Brought to you by
Read Full Story